Editorial 1: Remembering the impactful legacy of wise leadership

Context

After 2015, not one of the life-changing transformations in the lives of ordinary Indians was sustained.

 

Introduction

The passing of Manmohan Singh should be an occasion for evaluating the lasting legacy of the work initiated in the 1991 economic reforms, by him as the Finance Minister, and his team of high-calibre economists, Ministers and professionals (Montek Singh Ahluwalia, C. Rangarajan, P. Chidambaram, Shankar Acharya, and many others), and continued during his term as Prime Minister. Much has already been written on the animal spirits released by the 1991 economic reforms.

• But the period 2004-14, and the decade that followed, stand in such contrast that it is worth investigating them using verifiable government data — not views that reflect the observer’s ideological predilections.
• Five outcomes stand out, affecting citizens’ lives, and which laid the foundations of a hastened pace of structural change that could have led India to become a high-income/high-human development index country by the 2040s.

 

Appropriate macroeconomic policies

• Savings Rate Increase: Had begun to rise ever since the demographic dividend set in in the early 1980s.
• Savings/GDP Ratio: By 2003-04, the savings rate had risen to 23% of GDP.
• Investment/GDP Ratio: Investment reached 24% of GDP by 2003-04.
• Macroeconomic Policies: Appropriate macroeconomic policies enabled the increase of investment to GDP from 24% to 38% over the next six years.
• Highest Ever Achieved: This was the highest ever that India had achieved, nearing but still below Chinese investment rates.
• GDP Growth: The resulting growth averaged 8.5% per annum from 2004-05 to 2008-09 (under United Progressive Alliance I).
• Export Growth: Export growth (15%-18% per annum) could not have been maintained without real effective exchange rates being maintained at stable levels.

 

GDP Growth During 2004-2014

• Global economic crisis: Despite the global economic crisis of 2008-09, GDP growth dipped for a few quarters before recovering quickly.
• 2009-14 GDP growth: Due to a well-designed fiscal/monetary policy stimulus, the 2009-14 period also saw 7.5% p.a. growth.
• Overall growth (2004-14): The overall growth rate over 2004-14 averaged 7.8% p.a., which was unprecedented in India’s history.

 

Growth Across Sectors

• Unorganised and organised sectors: The growth encompassed all sectors — the unorganised and organised.
• Sustained aggregate demand: Aggregate demand was sustained, as all growth engines were firing (public and private investment, final consumption, exports, and government).
• Non-Farm kob growth: Non-farm jobs grew at a rate of 7.5 million p.a., which was unprecedented.
• Sector-Specific job growth: Construction Jobs: Construction jobs grew from 26 million in 2004 to 51 million in 2012 (nearly doubling).
  • Manufacturing jobs: Manufacturing jobs increased by 8 million, especially, but not only, in the labour-intensive sectors (accounting for half of all manufacturing employment), from 52 million to 60 million.
  • Modern services jobs: Jobs in modern services (telecom, sale/distribution of cars, financial intermediation/banking, insurance and pensions, airlines, railways, and health and education) also increased.
• Structural Change: Structural change in the economy, slow for half a century, really gathered momentum.

 

Agricultural Employment Shift

• Pre-2004-05 trend: Until 2004-05, non-farm jobs had grown so slowly that although migration from farm to non-farm occurred, never did the absolute number of workers in agriculture fall.
• Post-2004 change: For the first time in India’s post-independence history, the absolute number of workers on farms actually fell after 2004, as non-farm job growth was high.
• Tightened Rural labour market: This had the effect of tightening the labour market in rural areas over the entire period till 2014, helped by the government emerging as employer of last resort through the Mahatma Gandhi National Rural Employment Guarantee Act in 2005.

 

Rise in Real Wages

• Wage growth: The combined effect of new non-farm jobs and tightening rural labour market raised real wages, which rose all the way till 2015.
• Casual and regular work: This was true for both casual wage work and regular/salaried work.

 

Impact on Private Consumption and Poverty Reduction

• Private consumption growth: As real wages rose, private final consumption expenditure continued to rise, especially of simple consumer goods.
• Poverty reduction: For the first time in India’s history, the absolute number of poor fell.
  • Pre-2004-05: The incidence of poverty fell from 1973-74, but the absolute number of poor remained very sticky (due to population growth).
  • 2004-05 to 2011-12: Between 2004-05 and 2011-12, the number of people who rose above the poverty linewas 138 million — an achievement of staggering, almost Chinese, proportions.

 

Policy-induced shocks

• Growth Rate: Averaged 5.8% p.a. over the last 10 years.
• Policy-Induced Shocks: Three major policy-induced shocks contributed to this decline.
  • Demonetisation: Damaged the unorganised sector and agriculture, leading to the closure of Micro, Small and Medium Enterprises (MSMEs) on a vast scale (as demonstrated by the delayed NSS Annual Survey of Unorganised Sector Enterprises 2023).
  • Goods and Services Tax (GST): A poorly designed and badly implemented GST shock, for which MSMEsand the unorganised sector were unprepared, causing GDP growth rates to fall for the next nine quarters.
  • Strict Lockdown: The unnecessary national lockdown led to the Indian economy contracting by 5.8% in FY21, while the global economy contracted by only 3.1% during the COVID-19 pandemic.

 

Unemployment Crisis

• Unemployment Increase: Overall unemployment jumped from 2.2% in 2011-12 to a 45-year high of 6.1% in 2017-18 (NSSO).
• Jobless Numbers: The number of jobless individuals tripled, from one crore in 2011-12 to three crore in 2017-18.
  • Further Increase: The number rose again by at least 70 lakh by 2022.
• Job Growth:
  • 2004-2013: Jobs grew by 75 lakh per year in industry and services.
  • 2013-2019: Job growth dropped to 29 lakh per year, a 61% drop despite a 10% population increase.
• Youth Unemployment: Youth unemployment remained double, increasing from 6% in 2011-12 to 11% in 2022-23.
• Graduate and Postgraduate Unemployment: Unemployment rate for graduates and postgraduates is around 33%, with one in three looking unsuccessfully for a job.
• Impact on Skilled Workers: Engineers are becoming coolies and doctoral degree holders are applying for railway peon jobs.

 

Reversal of Structural Change

• Decline in Agricultural Workers (2004-2019): Between 2004-05 and 2017-18, the number of agricultural workers declined by 6.7 crore.
• Reverse Migration (2020-2024): This progress was fully reversed between 2020 and 2024, with eight crore workers added back to agriculture.
  • Unprecedented Reverse Migration: Never in world history has such a retrogressive reverse migrationoccurred.

 

Manufacturing and Job Losses

• Impact on Manufacturing: Manufacturing (especially unorganised sectors) took the brunt of job losses.
  • ‘Make in India’ Failure: ‘Make in India’ failed to generate expected outcomes.
• Share of Manufacturing in the Economy: The share of manufacturing in the economy fell from a consistent 17% of GVA for the previous 25 years to an all-time low of 13% in 2022.
  • Impact on Employment: Assembling expensive iPhones using imported parts from China hardly generates jobs.
  • Reviving Labour-Intensive Industries: Industries such as garments, textiles, furniture, leather goods, and processed food, which generate jobs, lost both jobs and exports.
• Manufacturing Jobs Decline:
  • The number of workers in manufacturing was 600 lakh in 2012, fell to 567 lakh by 2019 (pre-COVID).
  • By 2022, it had barely gone up to 629 lakh, despite the ‘Make in India’ initiative.

 

Distress and unpaid work

• Merchandise Exports Growth: Merchandise exports grew four times, from $77 billion in 2004 to $323 billion in 2014.
• Export Growth Between 2014-2022: Between 2014 and 2022, exports grew only one-and-a-half times, reaching $454 billion.
• Impact on Jobs: With less production for global markets, there were fewer jobs.

 

Wage Growth and Employment Shifts

• Regular Salaried Workers: The share of regular salaried workers in total employment, which was 23.8% in 2019 before COVID-19, fell to 20.9%.
• Unpaid Family Workers: The number of unpaid family workers had fallen from 11.1 crore in 2004 to 8.5 crore in 2012, and then further reduced by 2017 to 6.2 crore.
  • Sharp Increase by 2023: The number of unpaid family workers rose sharply to 10.4 crore by 2023.
  • Distress Driven Work: This shows that distress has driven family members (mostly children and women) into work to support the family, but they remain unpaid.
  • Misleading Unemployment Rate: This increase in unpaid family workers makes the unemployment rateappear better than it is, which is misleading.
• Rising Gold Loans: Gold-based loans, and defaults on them, are rising daily.

 

Conclusion

These reversals have put the earlier achievements under grave threat, and now give legitimate rise to concerns whether India will realise its demographic dividend before 2040. The growing inequality and constrained aggregate demand now may be putting paid to the prospects of India becoming ‘Viksit Bharat’.

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Editorial 2: Tackling delimitation by reversing population control 

Context

As the 2024 ‘word of the year’, the term has become a significant aspect of the modern world.

 

Introduction

Donald Trump’s victory in the 2016 U.S. presidential election prompted contemplation of a “divided” United States in terms of politics and society, bolstered by waves of fake news amid a post-truth era. In his book Polarization: What Everyone Needs to Know (2019), academic Nolan McCarty explores the social, economic, and geographic factors that contribute to polarisation in America, walking readers through both what is known and unknown about the causes, evolution, and ramifications of the nation’s growing political conflicts.

 

Political, Cultural, and Societal Divides in America

• America has recently appeared to be defined by profound political, cultural, and societal divides.
• Mr. Trump won a second term in 2024.
• And along with nine other words, “polarization” was chosen as the 2024 word of the year by Merriam-Webster, the U.S.’s premier dictionary.

“Polarization”: The term “polarization” — defined as “division into two sharply distinct opposites; especially, a state in which the opinions, beliefs, or interests of a group or society no longer range along a continuum but become concentrated at opposing extremes” — has become widely used in the media and in public discourse, and has become a significant aspect of modern life.

 

Media Perspectives on Polarization

• While MSNBC perceived the 2024 presidential election as having left America “more polarized than ever”,
• and Fox News reports that “[Vice-President-elect J.D.] Vance’s debate answer on immigration crisis shows voter polarization”,
• Forbes has cautioned that “cultural polarization is becoming a pressing challenge” in workplaces.
• Indeed, in October, Merriam-Webster stated that new terms such as “far left” and “far right,” as well as “MAGA” — the abbreviation for Mr. Trump’s divisive “Make America Great Again” movement — would be included in its dictionary in 2024.

 

Divisive Rhetoric During the Election

• Vice-President Kamala Harris warned of fascism under Mr. Trump during the heated election,
• while Mr. Trump used derogatory language and said his opponent was running on “destruction”.
• The election was so divisive that many Americans believed that the other candidate posed an existential threat to the U.S. when they cast their ballots.

 

Public Opinion on Political Beliefs

• About eight out of 10 Harris supporters were very or somewhat concerned that Mr. Trump’s beliefs, but not Harris’, were too radical,
• while roughly seven out of 10 Trump supporters felt the same way about Ms. Harris, but not Mr. Trump, according to AP VoteCast, a poll of over 120,000 people.
• The usage of the word is one aspect that is not polarized.
• According to Peter Sokolowski, editor at large for Merriam-Webster, “it’s something that actually everyone agrees on,” to put it in a slightly sardonic way.
• However, “polarization” has more than only political meanings.
• The controversy over Taylor Swift’s use of a private jet and the Drake-Kendrick Lamar feud (they are rappers) are perceived to be polarising.

 

Global Perspective on Polarization

• “Polarization” refers to beyond America also.
• Globally, centrist policies are being destroyed.
• Maybe Emmanuel Macron, the centrist French leader, or Olaf Scholz, the centre-left German leader, can better attest as to what it means if society is increasingly polarised.
• The insanity of the “other side” — in our politics, at work, or at home — confounds us.
• Even the “us vs. them” rift may frequently be trembling a political society such as ours.

 

A germination that began much earlier

• To believe that polarization is as recent as Mr. Trump’s presidency or that Trump or Trump-like individuals are to blame for today’s polarized world would be a grave mistake.
• The seeds of polarization were sown a long time ago.
• McCarty contended that these divisions have been developing for several decades and are firmly anchored in the way politics and society are structured.

 

Transformations in American Culture

• American culture has seen significant transformation in recent decades.
• Changes include shifting social group relationships, language and behavioural standards, and the rising importance of a college degree.
• The 1950s-60s civil rights struggles influenced the partisan culture conflicts of today.
• Decades before the parties’ split on these issues, opinions regarding civil rights were already associated with a variety of other culture war beliefs — much earlier than previous scholarship realized.
• Since the 1970s, income and wealth disparities have increased dramatically.
• These disparities have exacerbated existing polarization.

 

The Origins of Polarization

• To believe that polarization is as recent as Mr. Trump’s presidency or that Trump or Trump-like individuals are to blame for today’s polarized world would be a grave mistake.
• The seeds of polarization were sown a long time ago.
• McCarty contended that these divisions have been developing for several decades and are firmly anchored in the way politics and society are structured.

 

Transformations in American Culture

• American culture has seen significant transformation in recent decades.
• Changes include shifting social group relationships, language and behavioural standards, and the rising importance of a college degree.
• The 1950s-60s civil rights struggles influenced the partisan culture conflicts of today.
• Decades before the parties’ split on these issues, opinions regarding civil rights were already associated with a variety of other culture war beliefs — much earlier than previous scholarship realized.
• Since the 1970s, income and wealth disparities have increased dramatically.
• These disparities have exacerbated existing polarization.

 

In the modern context

• In recent years, there has been a notable technological revolution.
• Thus, “polarization” in the modern world can also be viewed through the prism of the shifting global order brought about by social media, the Internet, and artificial intelligence.
• Professor Chris Bail critically investigated the underlying causes of political tribalism on social media in his book, Breaking the Social Media Prism (2021).

 

Conclusion

It raises an interesting question: do our social media networks impact people’s political views? Or do people’s political views shape our networks? Prof. Bail’s research highlights how today’s political polarisation is exacerbated by the widening gap between social media and in-person encounters. His analogy of social media as a prism refracting, rather than mirroring, perfectly captures how it can skew how people see themselves and other people. And the AI genie also continues to transform social media and our way of life. The “us vs. them” drift grows as society, politics, and culture descend further into the rabbit hole, rendering the world more and more polarised.